Hastings UTA prepares for 2014 fundraising

The A$3.3 billion infrastructure fund is now 80% invested.

Following the firm’s £650 million (€766 million; $1 billion) acquisition of Terra Firma’s Phoenix Natural Gas, in Ireland, the Utilities Trust of Australia (UTA) – a fund managed by Hastings Funds Management – is preparing to come back to the market to raise more funds, the firm told Infrastructure Investor.

Once the Phoenix deal is closed, the A$3.3 billion (€2.6 billion; $3.4 billion) unlisted infrastructure fund would be about 80 percent invested. Colin Atkin, UTA’s chief executive, said the remaining capital would be enough to clinch one more $500 million to $600 million deal, for which UTA has already built up a pipeline in Australia and Europe.

Although UTA’s investments have historically been weighted toward Australia – with about 70 percent of the fund in invested domestically, 20 percent in the UK, and 10 percent in the US – the allocation to offshore investments will likely increase in the near future, Atkin added. The pipeline Hasting’s UTA team has developed is “pointing more towards Europe in the short term, as there is more activity in those markets,” he said.

With only one deal to go in the fund, Atkin – who was just named UTA’s chief executive in May – began going around to all investors of the fund in order to gauge their appetite for infrastructure . “When we asked them whether they would commit more capital, all by two investors said they wanted to deploy more money,” Atkin said. “So there is a lot of appetite already.”

With that encouragement, Hastings is planning to bring its oldest open-ended fund back into the fundraising fray. To begin with, Hasting will approach UTA’s existing investors, who are primarily comprised of Australian pension funds and superannuation funds, Atkin said. Once existing investors in UTA have re-upped all they want to, Hastings will open the fundraising for other investors.

While the firm did not disclose how large the fundraising round would be, UTA’s previous fundraising rounds have targeted under A$1 billion. In 2012, UTA raised A$610 million to bring the fund’s capitalisation to A$3.3 billion, according to Infrastructure Investor’s Research and Analytics division.

Since its 1994 inception, UTA has achieved average returns of 11.2 percent per annum, Atkin told Infrastructure Investor. In 2012, the core infrastructure-focused fund returned 11.5 percent to investors. Atkin said that UTA’s evergreen nature gives it a distinct advantage in doing deals and finding exits in infrastructure.

“We do investments based on the thinking: ‘that asset is going to be there forever’,” Atkin said. Not having a fixed exit date has helped the fund’s returns, and has also allowed the firm to be more “disciplined” in the kinds of investments it makes, he said.